| NEW YORK
NEW YORK Wall Street power brokers are betting that Greg Fleming will be chief executive of a major U.S. company one day, but no one is quite sure of which one or when.
Fleming, the head of Morgan Stanley's wealth and investment management businesses, is on the bank board's list of candidates who could potentially succeed Chief Executive James Gorman, according to sources with direct knowledge of the situation.
But colleagues and recruiters say he is also a flight risk for Morgan Stanley.
He is an external candidate for top jobs at companies including BlackRock Inc and American Express Co as part of their boards' regular succession planning.
Fleming also has a friendly rapport with Lloyd Blankfein, chief executive of arch rival Goldman Sachs Group Inc, although that bank has never gone outside its own ranks to pick a chief executive officer. Some people close to Fleming say he could even run a company outside of financial services.
It is unclear if a suitable CEO job will be available any time soon. Sources familiar with the thinking of Morgan Stanley's board said directors believe there is time to work on a succession plan. Gorman, 55, has been in the job for only four years, and directors have no desire to replace him at this time.
A Morgan Stanley spokesman said Fleming has no plans to leave the Wall Street bank. Fleming feels that his work at Morgan Stanley is not finished, and he is in no hurry to become a chief executive, the spokesman said.
The other institutions to which he has been linked did not offer any comment. Blankfein could not be reached for comment.
Still, Wall Street circles are abuzz with talk that the 50-year-old executive, known for an ambitious streak, may be itching for a bigger challenge soon, according to interviews with dozens of Morgan Stanley insiders and other industry executives who know Fleming.
"Every couple of years, he finishes what he set out to do, and people want to give him more," Navtej S. Nandra, a trusted Fleming ally who is now president of online broker E*TRADE Financial Corp. "Of course, that starts a whole slew of questions about what he's going to do next, and where."
It could create a knotty predicament for Morgan Stanley's board and Gorman. Directors like what Fleming is doing with his businesses and want to keep him at the firm, but they do not have an obvious spot to promote him within the bank.
People who know Fleming say he is at a crossroads as he enters his fifth year at the bank. He has steered Morgan Stanley Wealth Management through a complicated merger with Citigroup Inc's Smith Barney brokerage, lifting the division's profit margins to a targeted level after a bumpy start.
The business now generates more than half of Morgan Stanley's revenue. It is the centerpiece of Morgan Stanley and helped its shares rise nearly 65 percent last year.
As he has set the wealth business on course, Fleming has also come to wield greater influence at Morgan Stanley. For example, he argued for the bank to scale down its bond-trading risk more aggressively. Colm Kelleher, who heads institutional securities, decided that was the right approach.
"I have very high regard for his leadership and his achievement," said Masaaki Tanaka, one of two directors who represent Morgan Stanley's biggest shareholder Mitsubishi UFJ Financial Group Inc on the board.
Tanaka said Fleming had done very well in turning around the wealth business but declined to comment specifically on succession planning.
People who have worked with Fleming say he sets the bar high and can be demanding. Subordinates recalled him honing in on the one detail that was missing from a 30-page presentation and emailing round the clock to get updates on projects.
Yet they also say he rarely loses his temper. Colleagues who worked with Fleming during the mortgage crisis said they never heard him raise his voice, even during tense negotiations.
Friends and adversaries alike describe Fleming using terms like "Boy Scout" and "goodie two-shoes." One former colleague said Fleming tries to head home by 9:30 p.m., even on nights he is entertaining clients or hosting events. His only brush with the law appears to be a June 2009 speeding ticket.
Morgan Stanley's board may eventually promote Fleming to president of the whole bank, effectively anointing him Gorman's successor, some sources said.
But Gorman, who is also chairman, has no plans to recommend such a move in the near term. Promoting Fleming could discourage other senior managers, the sources said.
Neither the board nor Fleming want to upset his relationship with Kelleher or Chief Financial Officer Ruth Porat. Both are also on the board's succession list and work well with Fleming in the current power structure, the sources added.
Fleming's next move may come down to who offers him a job he wants first.
One close friend and former colleague said Fleming always had his eyes on being a chief executive officer.
"And, by the way, I'm not saying that negatively," said the person. "His ambition in life was not to be a star dealmaker or banker. His ambition in life was to become CEO of a large organization."
Still, after a quick ascent up Wall Street's corporate ladder, it has been a relatively long wait for Fleming to get to the corner suite.
Fleming joined Merrill Lynch in 1992 from the consulting firm Booz Allen, where he covered financial clients. By 1999, when he was only 35, he had become the head of the investment bank's U.S. financial institutions group.
He aggressively courted CEOs at acquisitive banks, like First Union and Bank of America Corp, that embarked on dozens of mergers in a consolidation streak from the mid-'90s into the 2000s.
In 2001, he appeared on the Crain's New York Business list of high achievers under 40. "I have a lot of confidence," he told the magazine. "It's not arrogance; it's confidence."
Two years later, Fleming had received two more big promotions at Merrill, first to head up investment banking globally and then to be co-president of the entire capital markets unit.
He increased the investment bank's revenue by 2-1/2 times while running it and personally advised on several landmark deals of the era, including Blackrock's 1999 initial public offering and First Union's $15 billion sale to Wachovia in 2001.
"One of the things which clearly stands out about Greg is that he's able to master virtually all the different aspects of a modern financial institution," said Sullivan & Cromwell's H. Rodgin Cohen, the preeminent bank lawyer who worked with Fleming on several deals.
Fleming got his first shot at the top job at a major company soon after Merrill Lynch Chief Executive Stan O'Neal promoted him to co-president of the firm in May 2007.
As the financial crisis took hold in the ensuing months, Merrill began disclosing escalating losses from subprime mortgage derivatives that grew to a crushing $45 billion. O'Neal and other executives responsible for the losses were fired.
The board effectively made Fleming interim chief executive, but his role was short-lived. It hired John Thain, a former Goldman Sachs executive, to fill the job permanently.
Directors decided against Fleming because they felt investors wanted someone who was not associated with the business that generated the losses, a source said.
Though Fleming was in charge of the entire unit, the board did not see him as directly responsible for the trading losses. Fleming was routinely shut out of management decisions regarding trading, and his unsolicited advice was ignored by superiors.
"While Greg would say he was without fault, the board didn't think the outside world would view it that way," the person said. "The world would've said, 'You're going to put the guy in the job that was responsible for this?'"
After helping to negotiate the sale of Merrill Lynch to Bank of America at the height of the crisis, Fleming left Wall Street.
He went to teach at Yale Law School, his alma mater, where he has given ethics lessons about cases such as Goldman Sachs' controversial "Abacus" derivatives deal and JPMorgan Chase & Co's "London Whale" fiasco.
A person involved with Fleming's hiring at Morgan Stanley said it was not easy to persuade him to return to Wall Street so soon after the crisis. However, unlike many bankers, he was not greedy about pay, this person added.
Fleming made as much as $34 million in his best year at Merrill Lynch but earned less than that in his first three years at Morgan Stanley combined.
When Fleming arrived in 2010, Morgan Stanley was shifting from being one of Wall Street's premiere investment banks with a retail brokerage unit tacked on, to having wealth management at the center of its profit universe. It was buying Smith Barney in phases and merging it with its own brokerage.
The plan to integrate the two businesses was engineered before Fleming arrived, and by most accounts it was going terribly. Clients' historical account information was not being transferred properly, and staff complained about all sorts of technology problems.
When Fleming embarked on a cross-country tour of brokerage offices in early 2012, he got an earful from angry employees.
"Greg was basically going on a listening tour and got hit in the face with it," says Mary Deatherage, a broker based in New Jersey.
He was resilient. Brokers recall him personally fielding complaints ranging from slow email and lack of client birthday reminders to bigger issues like a glitch with portfolio management systems that required a "SWAT team" to resolve.
"He did that for two or three years with that kind of a focus until an awful lot of the issues were subsiding," said Jim Hansberger, a veteran adviser in Atlanta.
In early 2013, Fleming announced a plan to invest $500 million in upgrading the unit's technology and hired former Merrill colleague Chris Randazzo to oversee technology.
"Greg immediately understood what I was talking about and wanted to get into very detailed discussions around where we are today and where do we need to be in 12 months and 24 months and 36 months and 48 months," Randazzo said. "You don't see that very much from very, very senior executives."
The wealth unit reached its 20 percent pre-tax profit margin goal last year. Management has since raised the goal to a range of 22 to 25 percent by next year if interest rates stay low and markets remain static. If rates rise and markets improve, the margin could be higher, executives say.
Fleming is trying to boost revenue further by lending more, an area where Morgan Stanley lags rivals like Merrill Lynch that are part of big commercial banks.
At a conference on Wednesday, Fleming also laid out targets to grow the investment management unit's assets by nearly 50 percent and boost its return-on-equity to 20 percent by 2016.
Some of Fleming's associates said that gives him enough to do at Morgan Stanley to bridle his ambition for some time.
Meanwhile, he is enjoying spending more time with his wife, Melissa, and their three children. He still teaches a class at Yale, and even found time last year to train for the New York City marathon, completing it in under 3.5 hours.
"There's an expression that the strongest horse gets the cart. That's Greg, right?" said E*TRADE's Nandra, whom Fleming had hired at both Merrill Lynch and Morgan Stanley. "I can't wait to see him as CEO some place one day, because I know that's who he is."
(Editing by Dan Wilchins, Paritosh Bansal and Cynthia Osterman)